Thursday, September 27, 2012

Stop The Bleeding - A Bad Situation Rarely Gets Better

A bad situation rarely gets better over time. So as a Manager, whether you are facing substantial losses, poor sales results, a problem employee, or any other negative factors impacting your business, it is better to make the tough decisions to Stop The Bleeding, sooner than later. As President and CEO of our company, about 3 or 4 times a year, I have to raise my hand to Stop The Bleeding because often Managers charged with managing a particular function are too close to it to make the tough decisions needed to impose change.

Hope is not a strategy.Just hoping a bad situation will get better over time does not make it better. Usually, action is required to get things back on track. All companies have clients, divisions, or departments that may not be meeting profitability targets. As old Al Einstein always said, doing the same thing over and over again and expecting a different result is the definition of insanity. When doing business with a client, or if a profit center is causing substantial losses, at some point, it requires a change in leadership, practices, products, or other factors impacting profitability. And, if nothing works, despite the emotional arguments to do otherwise, it may be time to exit the particular business.

If a client's business is unprofitable, it may require contract termination, if pricing cannot be renegotiated to make the client's business profitable. Most important, never, never take on a new client, knowing upfront that the business is unprofitable, no matter who the client may be, just to get their name on a client list. That is just plain dumb.

Sales is easier.By definition, a salesman who does not close business is not a salesman. We once had a sales guy that everyone loved. In fact, I had a client prospect tell me what a great guy this particular sales person was; yet when the client went out to bid for services, our company was not invited to bid on their business. When I saw this client contact later, I asked why if she liked our sales guy so much, we were not invited to bid.
I never did get a plausible answer that made any sense. This particular sales guy, like many others, was eventually terminated for failure to close business.

Usually, when hiring a salesman, even in businesses that involve a long sale cycle, it becomes very obvious within the first year, if the salesman is a closer, or not by virtue of the sales pipeline. This Blogger believes sales people are born, not made and my proof is that many sales people just don't make it. I think I have heard every excuse possible for failure to achieve sales results; but always remember that Card Talk and Number Don't Lie. Sales people are the easiest in the company to evaluate in terms of performance. No matter how much we may like the sales guy, if the numbers are not there, they are not there.

And, sales people who go from company to company in an industry is usually a very bad sign. We generally will not hire a retread. Unless there is a merger or acquisition, or some major reorganization, or an economic downturn, Companies rarely fire good sales people, unless their exuberance leads to unethical, or dishonest behavior. Sales people who are terminated are usually fired for failing to achieve required results. It really is pretty simple. Waiting to do it, doesn't solve the problem.

Problem employees, that show no improvement after counseling, should either be repositioned to better use their talent and skill set in another capacity, if possible, or if really serious, terminated and quickly because they will expose a company to financial liability from lawsuits. Employees that are poor performers, abusive, erratic, suffering from substance abuse, impossible to manage, or otherwise destructive of a positive work environment have to go. These situations rarely get better, so failure to take action just delays the inevitable termination and could even be dangerous.

Finally, there are a million other factors that can negatively impact a thriving business. Some we can control, while others are out of our control. As someone in Senior Management for more than 25 years, my survival instincts kick in. A good Senior Manager must see the train coming before being run over by it. Plan for the worst, and if the best happens, your company will just be further ahead. Most important, Stop The Bleeding sooner than later to insure the success of your company.